Fed's Powell suggests inflation fight nearing end, a boost to Harris
Facing the possibility of a rate cut in the near future, Harris may contend that the economy is at last making progress in overcoming inflation.
TroibNews 
Federal Reserve Chair Jerome Powell indicated on Wednesday that the central bank might consider cutting interest rates as soon as September, suggesting that the battle against high inflation is nearing its end.
This potential timing could be particularly advantageous for Vice President Kamala Harris.
The Biden administration has faced challenges in persuading voters that the economy is performing well, despite factors like low unemployment and rising wages. This difficulty is largely due to Republican criticism over consumer prices, which have increased by around 20 percent since President Joe Biden assumed office, outpacing wage growth.
With a rate cut potentially on the horizon, Harris and the Democrats could argue that the economy is finally making headway against inflation.
“Lower interest rates will be doubly positive news to consumers,” said Ernie Tedeschi, a former Biden administration official. “They’re welcome news in their own right, but lower rates will also punctuate the better inflation data throughout the economy.”
“That’s the same victory over inflation that Democrats will also be touting,” added Tedeschi, who is now the director of economics at Yale Budget Lab.
The Fed’s preferred inflation measure is approaching the central bank's 2 percent target, while the job market remains relatively robust. This scenario is giving Powell greater confidence to potentially ease economic pressures after maintaining high borrowing costs for the past year.
During a Wednesday press conference, Powell mentioned that policymakers have yet to make a firm decision about their next steps at the upcoming meeting on Sept. 17-18. However, he noted that a rate cut is "on the table" if economic indicators continue on their current trajectory.
Although Powell's statement confirmed the expectations of many investors prior to the Fed's announcement, his remarks are expected to lift markets and businesses anticipating relief from elevated borrowing costs in the near future. Stocks experienced an uptick following Powell's press conference.
A September rate cut would present a delicate situation for Powell as it would occur less than two months before the presidential election.
Both former President Donald Trump and congressional Republicans have cautioned the central bank against any pre-election actions, arguing that it could be perceived as political interference.
Nonetheless, Powell emphasized that the central bank bases its decisions solely on economic considerations and not on political factors.
“Congress has ordered us to conduct our business in a non-political way at all times, not just some of the time,” he told reporters. “We never use our tools to support or oppose a political party, a politician, or any political outcome. The bottom line is, if we do our very best to do our part and we stick to our part, that will benefit all Americans.”
Olivia Brown contributed to this report for TROIB News
This potential timing could be particularly advantageous for Vice President Kamala Harris.
The Biden administration has faced challenges in persuading voters that the economy is performing well, despite factors like low unemployment and rising wages. This difficulty is largely due to Republican criticism over consumer prices, which have increased by around 20 percent since President Joe Biden assumed office, outpacing wage growth.
With a rate cut potentially on the horizon, Harris and the Democrats could argue that the economy is finally making headway against inflation.
“Lower interest rates will be doubly positive news to consumers,” said Ernie Tedeschi, a former Biden administration official. “They’re welcome news in their own right, but lower rates will also punctuate the better inflation data throughout the economy.”
“That’s the same victory over inflation that Democrats will also be touting,” added Tedeschi, who is now the director of economics at Yale Budget Lab.
The Fed’s preferred inflation measure is approaching the central bank's 2 percent target, while the job market remains relatively robust. This scenario is giving Powell greater confidence to potentially ease economic pressures after maintaining high borrowing costs for the past year.
During a Wednesday press conference, Powell mentioned that policymakers have yet to make a firm decision about their next steps at the upcoming meeting on Sept. 17-18. However, he noted that a rate cut is "on the table" if economic indicators continue on their current trajectory.
Although Powell's statement confirmed the expectations of many investors prior to the Fed's announcement, his remarks are expected to lift markets and businesses anticipating relief from elevated borrowing costs in the near future. Stocks experienced an uptick following Powell's press conference.
A September rate cut would present a delicate situation for Powell as it would occur less than two months before the presidential election.
Both former President Donald Trump and congressional Republicans have cautioned the central bank against any pre-election actions, arguing that it could be perceived as political interference.
Nonetheless, Powell emphasized that the central bank bases its decisions solely on economic considerations and not on political factors.
“Congress has ordered us to conduct our business in a non-political way at all times, not just some of the time,” he told reporters. “We never use our tools to support or oppose a political party, a politician, or any political outcome. The bottom line is, if we do our very best to do our part and we stick to our part, that will benefit all Americans.”
Olivia Brown contributed to this report for TROIB News
